Robinhood, a commission-free US stock trading app, is following its namesake to the land of Sherwood Forest and Maid Marian. After raising $323 million last month, the company—now valued at $7.6 billion—announced Wednesday (Aug. 7) it received regulatory approval to operate as a broker in the United Kingdom.
Robinhood didn’t share a date for its UK launch, but its authorization by the Financial Conduct Authority clears the way for the company’s new London office. The company also introduced Wander Rutgers, a veteran of TransferWise, as head of its UK business this week. Before joining Robinhood in November, Rutgers worked on product for Plum, a money management chatbot company, according to his LinkedIn Profile.
Over the last several years, the UK has become one of the world’s richest fintech hubs. Between 2015 and 2018, the UK attracted £9 billion ($10.9 billion) in tech investments according to TechNation, a government-funded network that helps startups scale. Meanwhile, London has become a launchpad for online and alternative banking services, such as Monzo and Starling. The FCA’s willingness to engage with fledgling financial services companies through Project Innovate, its regulatory sandbox, has encouraged bold experimentation. Supporting investing startups is a natural progression.
While Robinhood faced more skepticism than opposition in the US since its 2013 founding, the UK’s competitive landscape presents a new challenge. Copycat companies like Freetrade have already established a foothold, offering investors access to US and UK stocks, with the FCA’s approval. Freetrade has also begun a waitlist for customers in France, Germany, and Holland, priming the broader European market before its planned expansion.
However, Freetrade’s clearest limitation is funding. Whereas Robinhood enjoys the backing of deep-pocketed venture capital firms, Freetrade has relied on a disparate group of investors. In July, the startup raised £4 million through Crowdcube a crowdfunding platform. Despite its name, Freetrade only offers free trades when customers submit orders that get executed (ostensibly together) at the end of the day. By comparison, Freetrade’s instant orders cost £1 each.
Revolut, a digital banking company, could also pose a mild threat to Robinhood’s anticipated UK debut. In July, the company began offering Revolut Metal Customers 100 commission-free stock trades per month. Again, the service isn’t really “free” though—it’s an additional perk. Revolut’s Metal Customers already pay £12.99 per month for a steel card which provides them 1% cash back on purchases.